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2020-10-29

Analysis Kopy Goldfields: "Exciting times ahead"

Detta är en betald analys på uppdrag av Kopy Goldfields utförd av Analysguiden
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Important steps

The reverse takeover by gold exploration company Kopy Goldfields of Russian gold producer Amur Zoloto was, as expected, approved by authorities and is now fully completed. Kopy Goldfields is now a notable player in the Russian gold universe with growth opportunities in existing mining assets and through continued exploration. Recent updates of the company’s Mineral Reserves and Resources look very promising for future gold mining production.

The combined company covers the full range from gold prospecting and exploration in attractive areas in Russia to cash generating ore mining and processing. Kopy Goldfields has significantly changed its profile and now covers mine production with future potential in gold exploration projects.

The deal adds revenue streams and cash flow from Amur Zoloto’s gold mine production to Kopy Goldfields’ exploration business. We believe that the combined entity will ease investors’ earlier concerns over Kopy Goldfields’ financial situation and will be supportive as regards future growth opportunities for existing exploration licenses, most notably the Krasny project. We believe that the likelihood of Krasny being developed to a mine in production has significantly increased.

Summary of pro forma financials

Kopy has provided summarized pro forma financials for the combined Kopy Goldfields and Amur Zoloto entity. The significant increase in sales and results for the period January-June 2020 reflects internal improvements and a strong gold market. Pro forma sales were 427,9 TSEK (278,7), where Amur Zoloto contributed to all revenue. EBITDA amounted to 155,5 TSEK, up 42% compared to the first half of 2019. Pro forma net debt was SEK 441m as of June 30. Kopy recently announced an operational update and gold production for the period January-September amounted to 42 koz, a slight decrease from the corresponding period last year (43.5 koz), mainly affected by disturbances related to Covid-19.

Going forward

The global gold market has continued to be strong. The company estimates for 2020 and 2021 are based on a stable gold price from current levels at 1,905 USD/oz. The market has discounted that Kopy has moved from a pure exploration company to a cash generating miner. Share price performance has been driven by the market’s appreciation of the transformation of Kopy’s asset base together with the historically high gold price. However, valuation multiples for 2020 and 2021 still look attractive. The next company specific trigger would probably be news on how the Krasny project will develop.

Författare Analysguiden

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